A new article of faith: don't make the poor balance the budget

There is a political article of faith: “Don’t raise taxes during a recession.” Just Google the phrase
and you’ll find some 2.5 million results. The popular idea is that
deeply embedded into our political thinking. Of course it makes economic
sense: You want people to spend their money on goods and services. Then
producers will hire more people, and people will have more money to
spend, yadda yadda.

Here’s
my concern: While there is consensus to protect the richest Americans –
those who pay income taxes – there is little discourse, yet alone
agreement, about protecting the poor and the working poor. We hear about
saving the middle class, we hear about tax cuts for everyone (except
this only applies to the income tax, not to the payroll taxes, a tax
that is far more burdensome to those who earn less). But what about
those who work hard but don’t earn a high wage?

Red areas on the map show where more than 40 percent receive the
Earned Income Tax Credit. In Montana, it’s basically the state’s Indian
reservations. (Source: The Brookings Institution)

I’ve already written about the zest for cutting government programs and jobs,
ideas that will add to the unemployment crisis and take more “spending”
money out of the economy. Unemployed people, yes, even people who once
worked for the government, don’t spend. This is money that will be
subtracted from the economy.

I agree that we need to cut federal spending. We need to balance the
budget and pay down the massive debts we’ve accumulated. (This is a
position I’ve argued for doing for most of my professional career as a
columnist.) But we don’t have to do this all at once.

A presidential debt commission
will release its proposals in December to balance the budget. A draft
is already out there with a few big ticket ideas: Slowly raising the
retirement age, making $3 in spending cuts for every dollar in higher
revenue and a flatter income tax structure (and one that generates more
revenue). But there are also little proposals, almost meaningless, such
as ending the payments to states and tribes for abandoned mines.

One idea that’s floating around is to eliminate the Earned Income Tax Credit.
This would have terrible consequences for the working poor – especially
people who live in Native American communities. The Earned Income Tax
Credit is one of the most successful anti-poverty programs ever. It’s a
tax credit that puts real money back into the pockets of families who
are supporting themselves on modest incomes.

A report from
the Brookings Institution looking at three decades of the tax credit
and puts it this way: “The EITC has proved remarkably successful in
reducing poverty. In 2003, the EITC lifted 4.4 million people in
low-income, working families out of poverty, more than one-half of them
children. Today, the EITC lifts more children out of poverty than any
other social program or category of programs. Without it, the poverty
rate among children would be 25 percent higher.”

The tax credit has been singularly successful on American Indian reservations and in Alaska Native villages. For example: Pull up a map
of where the tax credit is most used and you see Indian Country. In
many Native communities more than 40 percent of the population now is
eligible for this credit. Just peek at Montana’s map for an example. The
areas where the EITC is most common are the state’s Indian
reservations. Make no mistake about this, reducing or eliminating the
Earned Income Tax Credit will have a disproportionate impact on Indian
Country.

It is important, over the long haul, to reign in the federal budget.
But that cannot be accomplished by stripping away the programs and tax
credits that actually make life better for poor, working American
families. This proposal is being shopped at the very moment when
government services and jobs are already being cut in those same
communities.

A sad truth is that the recession doesn’t mean as much in a poor
community as a rich one. When unemployment rates are already 50 percent,
what difference does a point or two make?

But in this national zeal to balance the budget we should not make
the situation worse. If we can make it an article of faith to not raise
taxes during a recession, we should also be certain not to make life
worse for American who work hard and barely earn enough to support their
families.

Mark Trahant is a writer, speaker and Twitter poet. He is a member
of the Shoshone-Bannock Tribes and lives in Fort Hall, Idaho. Trahant’s
new book, “The Last Great Battle of the Indian Wars,” is the story of
Sen. Henry Jackson and Forrest Gerard.